Czarnikow-Rionda Sugar Trading Inc V Standard Bank London LTD and Others (1999) 1 All ER (Comm) 890

All England Law Reports 9 June 1999
890 All England Law Reports [1999] 1 All ER (Comm)
Czarnikow-Rionda Sugar Trading Inc v a

Standard Bank London Ltd and others
QBDCzarnikow-Rionda v Standard Bank
QUEEN’S BENCH DIVISION (COMMERCIAL COURT)

RIX J
b
17, 18, 22 FEBRUARY, 6 MAY 1999
Bank – Documentary credit – Irrevocable credit – Injunction restraining payment by

issuing bank – Bank issuing letters of credit addressed to Swiss banks at plaintiff ’s
request – Swiss banks discounting proceeds to beneficiary company – Plaintiff seeking
to rescind contract underlying letters of credit on grounds of fraud by beneficiary’s c
parent company – Plaintiff obtaining ex parte injunction restraining bank from paying
Swiss banks under letters of credit – Plaintiff seeking continuation of injunction until
trial – Whether court could grant such an injunction.
The plaintiff was involved in a series of transactions with a Brazilian group, DG, d
including three contracts for the import of alcohol into Brazil (the purchase
contracts). Pursuant to those contracts, it requested the defendant bank, SBL, to
open letters of credit, naming a DG associate company as beneficiary. SBL duly
issued the letters of credit which were addressed to two Swiss banks. The Swiss
banks advised and confirmed the letters at SBL’s request, and discounted their
e
proceeds either directly to the beneficiary or indirectly under back-to-back letters
of credit issued to the beneficiary’s suppliers. Shortly before SBL was due to pay
the Swiss banks under the letters of credit, the plaintiff commenced proceedings
for rescission of the purchase contracts, contending that it had entered into those
contracts on the basis of fraudulent misrepresentations by DG. The plaintiff joined
SBL as a defendant to those proceedings, relying on the fraud exception to the rule f
that a bank was obliged to comply with its letter of credit, and obtained an ex parte
injunction restraining SBL from making payment under the letters of credit. The
Swiss banks subsequently applied to have the injunction discharged, but that
application was opposed by both the plaintiff and SBL. The latter contended that
the fraud exception was based on the court’s willingness to interfere in order to
prevent the furtherance of a fraud, and that therefore such an injunction could be g
granted even if the customer had no cause of action against the bank. It further
followed that the balance of convenience weighed in favour of granting the
injunction in cases where the customer, if required to indemnify the bank against
payment, might have difficulty in recovering against the fraudster.
h
Held – Where a bank issued a letter of credit at its customer’s request, the court
would not normally grant the customer an interlocutory injunction restraining the
bank, on the basis of the fraud exception, from making payment under the letter.
In such a case, either the balance of convenience would be in the bank’s favour or
the court would have no jurisdiction to grant the injunction. Thus if the customer j
had a claim against the bank, it would have an adequate remedy in damages, while
if it had no such claim there could be no basis for granting the injunction.
Moreover, even if the court could grant such an injunction in the absence of a
cause of action against the bank, the importance of maintaining the integrity and
autonomy of banking commitments outweighed the demands of the allegedly
defrauded claimant who could obtain Mareva relief against the alleged fraudster.
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QBD Czarnikow-Rionda v Standard Bank 891
Thus on an inter partes application for such an injunction, the balance of

a convenience would be in the bank’s favour in the absence of exceptional
circumstances. It followed that in the instant case the injunction would be
discharged (see p 894 e to j, p 912 h j, p 913 j to p 914 a h to p 915 a d e, p 916 a to e
and p 921 j to p 922 a, post).
United Trading Corp SA v Allied Arab Bank Ltd [1985] 2 Lloyd’s Rep 554 and GKN
b Contractors Ltd v Lloyds Bank Ltd (1985) 30 Build LR 48 applied; Bolivinter Oil SA v
Chase Manhattan Bank [1984] 1 Lloyd’s Rep 251 considered; Themehelp Ltd v West
[1995] 4 All ER 215 doubted.
Per curiam. It is an abuse of process for a plaintiff to seek to obtain effective
relief against foreign persons outside the jurisdiction by a collusive action against
a defendant who can be served within the jurisdiction if, in reality, there is no real
c issue between the colluding parties (see p 919 c, post).
Notes
For injunctions restraining payment under a letter of credit, see 3(1) Halsbury’s
Laws (4th edn reissue) para 290.
d
Cases referred to in judgment
Anns v Merton London Borough [1977] 2 All ER 492, [1978] AC 728, [1977] 2 WLR
1024, HL.
Bolivinter Oil SA v Chase Manhattan Bank [1984] 1 Lloyd’s Rep 251, CA.
Channel Tunnel Group Ltd v Balfour Beatty Construction Ltd [1993] 1 All ER 664,
e [1993] AC 334, [1993] 2 WLR 262, HL.
Deutsche Ruckversicherung AG v Walbrook Insurance Co Ltd, Group Josi Re (formerly
known as Group Josi Reassurance SA) v Walbrook Insurance Co Ltd [1996] 1 All
ER 791, sub nom Group Josi Re (formerly Group Josi Réassurance SA) v Walbrook
Insurance Co Ltd [1996] 1 WLR 1152, CA; affg [1994] 4 All ER 181, [1995] 1
f WLR 1017.
Discount Records Ltd v Barclays Bank Ltd [1975] 1 All ER 1071, [1975] 1 WLR 315.
Dong Jin Metal Co Ltd v Raymet Ltd [1993] CA Transcript 945.
GKN Contractors Ltd v Lloyds Bank Ltd (1985) 30 Build LR 48, CA.
Harbottle (R D) (Mercantile) Ltd v National Westminster Bank Ltd [1977] 2 All ER
862, [1978] QB 146, [1977] 3 WLR 752.
g Intraco Ltd v Notis Shipping Corp, The Bhoja Trader [1981] 2 Lloyd’s Rep 256, CA.
Iraqi Ministry of Defence v Arcepey Shipping Co SA (Gillespie Bros & Co Ltd
intervening), The Angel Bell [1980] 1 All ER 480, [1981] QB 65, [1980] 2 WLR
488.
Kvaerner John Brown Ltd v Midland Bank plc [1998] CLC 446.
h Mareva Cia Naviera SA v International Bulkcarriers Ltd [1975] 2 Lloyd’s Rep 509,
CA.
Mercantile Group (Europe) AG v Aiyela [1994] 1 All ER 110, [1994] QB 366, [1993]
3 WLR 1116, CA.
Norwich Pharmacal Co v Customs and Excise Comrs [1973] 2 All ER 943, [1974] AC
j 133, [1973] 3 WLR 164, HL.
Owen (Edward) Engineering Ltd v Barclays Bank International Ltd [1978] 1 All ER
976, [1978] QB 159, [1977] 3 WLR 764, CA.
Potton Homes Ltd v Coleman Contractors Ltd (1984) 28 Build LR 19, CA.
Siskina (cargo owners) v Distos Cia Naveria SA, The Siskina [1977] 3 All ER 803,
[1979] AC 210, [1977] 3 WLR 818, HL; rvsg [1977] 3 All ER 803, [1979] AC 210,
[1977] 3 WLR 532, CA.

South Carolina Insurance Co v Assurantie Maatschappij ‘de Zeven Provincien’ NV,

South Carolina Insurance Co v Al Ahlia Insurance Co [1986] 3 All ER 487, [1987] a
AC 24, [1986] 3 WLR 398, HL.
Sztejn v J Henry Schroder Banking Corp (1941) 31 NYS 2d 631, NY SC.
Themehelp Ltd v West [1995] 4 All ER 215, [1996] QB 84, [1995] 3 WLR 751, CA.
Tukan Timber Ltd v Barclays Bank plc [1987] 1 Lloyd’s Rep 171.
Turkiye Is Bankasi AS v Bank of China [1996] 2 Lloyd’s Rep 611. b
United City Merchants (Investments) Ltd v Royal Bank of Canada [1982] 2 All ER
720, [1983] AC 168, [1982] 2 WLR 1039, HL.
United Norwest Co-operatives Ltd v Johnstone [1994] CA Transcript 1482.
United Trading Corp SA v Allied Arab Bank Ltd [1985] 2 Lloyd’s Rep 554, CA.
Application c
The applicants, the United European Bank (UEB) and Banque Cantonale de
Geneve (BCGe) applied, as interested third parties, for the discharge of an
injunction granted on 31 July 1998 by Tuckey J on the ex parte application of
the plaintiff, Czarnikow-Rionda Sugar Trading Inc (Rionda), restraining the
first defendant, Standard Bank London Ltd (Standard), from making payment d
to the applicants under letters of credit which had been issued by Standard at
Rionda’s request and which named as beneficiary the fifth defendant, Vivalet
Ltd, an associate company of the second defendant, Grupo Dine. Vivalet,
Grupo Dine and the five other defendants, who were all associate companies of
Grupo Dine, played no part in the application. The application was heard in
chambers but judgment was given in open court. The facts are set out in the e
judgment.
Stephen Males QC and Michael Collett (instructed by Middleton Potts) for UEB.
Michael Brindle QC and Derrick Dale (instructed by Edwin Coe) for BCGe.
Trevor Philipson QC and Clare Ambrose (instructed by Berwin Leighton who did not f
act on the ex parte application) for Rionda.
Nicholas Strauss QC and John McCaughran (instructed by Morgan Lewis & Bockius)
for Standard.
Cur adv vult
g
6 May 1999. The following judgment was delivered.
RIX J. In these proceedings the plaintiff, Czarnikow-Rionda Sugar Trading Inc

(Rionda), seeks to maintain a pre-trial injunction against the first defendant,
Standard Bank London Ltd (Standard), to prevent it from paying out to two h
Swiss banks at maturity the proceeds of three letters of credit, which Standard
had opened at the request of its customer, Rionda, and which the Swiss banks
had at Standard’s request advised and confirmed. Rionda seeks such an
injunction on the basis of the ‘exception in the case of what is called established
or obvious fraud to the knowledge of the bank’ (see Edward Owen Engineering
Ltd v Barclays Bank International Ltd [1978] 1 All ER 976 at 981, [1978] QB 159 at j
169 and United Trading Corp SA v Allied Arab Bank Ltd [1985] 2 Lloyd’s Rep 554)
even though (i) it claims no relief against the Swiss banks themselves; (ii) the
Swiss banks had already discounted the proceeds of the letters of credit either
directly to the beneficiary or indirectly under back-to-back letters of credit
issued to the beneficiary’s suppliers (but not entirely back-to-back: in

QBD Czarnikow-Rionda v Standard Bank (Rix J) 893
particular, the third ‘back-to-back’ letter of credit matured within seven days of
a the bill of lading date, not 390 days as did Standard’s credit); (iii) such
discounting had taken place well before any question of fraud was raised; (iv)
the documentary sales in respect of which the letters of credit were opened
have been performed; and (v) the shipping documents in connection with such
sales had already long before been negotiated to and accepted by Standard.
b Can such a situation be brought within the fraud exception? Is a pre-trial
injunction just and convenient?
Rionda says that it can and it is. Standard is currently neutral as to the
substantive merits, and says that it will make up its mind what to do, i e
whether or not to pay the Swiss banks, in the light of the court’s judgment. It
c is, however, strongly in favour of the continuation of the ex parte injunction
made against it by Tuckey J on 31 July 1998. The Swiss banks, United
European Bank (UEB) (formerly United Overseas Bank) which confirmed two
of the letters of credit, and Banque Cantonale de Geneve (BCGe) which
confirmed the third, say that, apart from anything else, the balance of
convenience is against such an injunction. Indeed, BCGe wishes to take its
d stand purely on the balance of convenience, asserting that it may do so without
submitting to the jurisdiction, and being prepared to assume for the sake of the
argument on balance of convenience that the fraud exception is otherwise
made out. UEB, on the other hand, while also asserting that the balance of
convenience argument is a short-cut to the discharge of the injunction against
Standard, would also like to argue substantive points relating to the scope of
e
the banking contracts in an attempt summarily to dispose of all possibility of
proceedings involving it: for these purposes it would be willing to submit to the
jurisdiction of the English court. For its part, it does not accept that the fraud
exception has been made out in the present case. The other parties before me,
however, are reluctant to enter into a summary trial, not least because the
f beneficiary of the letters of credit, the fifth defendant, Vivalet Ltd, has not been
represented at the hearing before me.
It has emerged in the course of argument that, if an injunction is possible,
then it has only been upheld, so far as counsel before me are aware, on two
occasions inter partes, both of them recent. (Thus Phillips J was able to say
g only a few years ago in Deutsche Ruckversicherung AG v Walbrook Insurance Co
Ltd, Group Josi Re (formerly known as Group Josi Reassurance SA) v Walbrook
Insurance Co Ltd [1994] 4 All ER 181 at 196, [1995] 1 WLR 1017 at 1030 that he
knew of no reported case upholding the grant of an injunction on the basis of
the fraud exception in inter partes proceedings.) One was in Themehelp Ltd v
h West [1995] 4 All ER 215, [1996] QB 84, where a sufficient case of fraud was
made out and a majority of the Court of Appeal accepted that a pre-trial
injunction should be granted to restrain the beneficiary from enforcing a
performance guarantee because on the balance of convenience it was thought
that otherwise the plaintiff might be in peril of being forced to indemnify the
guarantor and of then being unable to recover its outlay from the fraudulent
j beneficiary even if fraud was ultimately proven at trial. The other occasion
was in Kvaerner John Brown Ltd v Midland Bank plc [1998] CLC 446, where
Cresswell J refused to discharge a pre-trial injunction restraining Midland Bank
from making payment under a letter of credit on the ground of the
beneficiary’s manifest fraud in certifying to the bank the giving of a required
notice to the plaintiff when it had not done so.

The difficulty with the first of those cases, however, is that it appears to have
proceeded at least in part on the basis of a concession that there was a a
difference between an injunction being granted against a bank on the one hand
and on the other hand against a fraudulent beneficiary, at any rate in the
absence of suit against the bank and at an early stage before any question of
direct enforcement of the guarantee at the behest of the beneficiary had yet
arisen (see [1995] 4 All ER 215 at 225, 227, [1996] QB 84 at 97, 98, 99). In b
Deutsche Ruckversicherung AG v Walbrook Insurance Co Ltd, Group Josi Re (formerly
known as Group Josi Reassurance SA) v Walbrook Insurance Co Ltd [1996] 1 All ER
791 at 801, [1996] 1 WLR 1152 at 1161–1162 Staughton LJ pointed out that that
distinction was contrary to settled doctrine, as indeed the parties before me
would all accept. Thus Staughton LJ said:
c
‘The effect on the lifeblood of commerce will be precisely the same
whether the bank is restrained from paying or the beneficiary is restrained
from asking for payment. That was the view of Donaldson MR in
Bolivinter Oil SA v Chase Manhattan Bank ([1984] 1 Lloyd’s Rep 251 at 256),
of Donaldson LJ in Intraco Ltd v Notis Shipping Corp, The Bhoja Trader [1981] d
2 Lloyd’s Rep 256 at 257, of Lloyd LJ in Dong Jin Metal [1993] CA Transcript
945, and of both Clarke and Phillips JJ in the present case.’
The difficulty with the second of those cases, moreover, is that although the
fraud was manifest there was no consideration of the balance of convenience.
This has usually been a stumbling block in the way of grant of an interlocutory e
injunction, for the reasons trenchantly explained by Kerr J in R D Harbottle
(Mercantile) Ltd v National Westminster Bank Ltd [1977] 2 All ER 862 at 869, [1978]
QB 146 at 155, where he spoke of ‘an insuperable difficulty’:
‘However, let it be assumed in the plaintiffs’ favour that these

considerations would not by themselves preclude the court from f
continuing the injunctions against the bank. The plaintiffs then still face
what seems to me to be an insuperable difficulty. They are seeking to
prevent the bank from paying and debiting their account. It must then
follow that if the bank pays and debits the plaintiffs’ account, it is either
entitled to do so or not entitled to do so. To do so would either be in g
accordance with the bank’s contract with the plaintiffs or a breach of it. If
it is in accordance with the contract, then the plaintiffs have no cause of
action against the bank and, as it seems to me, no possible basis for an
injunction against it. Alternatively, if the threatened payment is in breach
of contract, which the plaintiffs’ writs do not even allege and as to which h
they claim no declaratory relief, then the plaintiffs would have good claims
for damages against the bank. In that event the injunctions would be
inappropriate, because they interfere with the bank’s obligations to the
Egyptian banks, because they might cause greater damage to the bank
than the plaintiffs could pay on their undertaking as to damages, and
because the plaintiffs would then have an adequate remedy in damages. j
The balance of convenience would in that event be hopelessly weighted
against the plaintiffs.’
That passage was adopted and applied by the Court of Appeal in United Trading
Corp SA v Allied Arab Bank Ltd [1985] 2 Lloyd’s Rep 554 at 565–566.

In the present case Michael Brindle QC, who appeared for BCGe, staked his
a application largely on such considerations of balance of convenience, allied
with the submission that in any event the fraudsters had already received the
benefit of the letters of credit in the form of discounted payments to them or
their suppliers.
On behalf of Rionda, however, Trevor Philipson QC, together with Nicholas
b Strauss QC on behalf of Standard, has submitted that the iron grip of Kerr J’s
analysis can be broken by the realisation that the basis of the fraud exception is
not a cause of action against the bank but the court’s willingness to interfere to
prevent the furtherance of a fraud. On that basis, if once a case of fraud is
established sufficiently for pre-trial relief, then the court ought, as a matter of
balance of convenience, to be prepared to grant an injunction in any case
c where either the bank, if it pays, may find it difficult to recoup its payment
from its customer, or the customer, if it is forced to indemnify the bank against
payment, may find it difficult to recover against the fraudster. In this
connection Themehelp Ltd v West becomes not merely a welcome if rare
example of the exercise of the jurisdiction to interfere, but a guide to its
d exercise: see [1995] 4 All ER 215 at 215–229, [1996] QB 84 at 100–101 where
Waite LJ said:
‘If the sellers are allowed to claim now under the guarantee, the
guarantors will be entitled, by virtue of their indemnity, to call for
immediate recoupment by the buyers of the substantial sum (£775,000)
e which it secures. If the buyers succeed in establishing fraud at the trial,
they will only be able to recover that sum in full if there are assets available
to satisfy a judgment against the sellers for an equivalent amount in
damages for fraudulent misrepresentation (this being a case where
rescission is likely to prove wholly impracticable and damages to be the
only remedy). Bearing in mind that both defendants are out of the
f jurisdiction, and that there is no evidence that they have sufficient assets
remaining in this country to satisfy any such judgment, there must be an
appreciable risk that it could not be wholly satisfied. If, on the other hand,
the buyers fail to establish fraud at trial, the sellers will be fully protected
by the continuing rights under the guarantee which they will then be free
g to enforce; and if it be found that they have suffered any damage as a result
of having to delay enforcement, that will be covered by the buyers’
undertaking in damages (there was evidence before the judge that the
buyers are a solvent concern with a turnover of £2m). It seems to me,
therefore, that justice to the buyers requires that they should be spared the
h necessity of making a payment now of moneys which they have only an
uncertain prospect of recovering at trial, even if wholly successful.’
Indeed, Mr Strauss recognised before me that, if his submission as to the basis
of the jurisdiction was correct, then not only would the iron grip of Kerr J’s
insuperable difficulty be broken, but in all or almost every case within the fraud
j exception, the balance of convenience would be in favour of a pre-trial
injunction.
Mr Philipson also submits that the Swiss banks were not authorised to
discount the proceeds of the letters of credit in advance of their maturity dates:
if they did so, they acted without authority under their mandate from Standard
and stand in the shoes of the beneficiary Vivalet. Mr Strauss, for Standard, is

agnostic about such arguments but submits that provided the court accepts
that it is at least seriously arguable that the Swiss banks have acted outside their a
mandate, then the balance of convenience favours an injunction on this ground
too. In this connection, Mr Strauss makes it clear that Standard is not
concerned that an injunction preventing payment under its letters of credit
would damage its reputation or interfere with international commerce, albeit
that has been the theme of banks in all the leading cases, but is concerned that b
it will become embroiled whether it likes it or not in conflicting claims and
assertions. If it does not pay, it will be sued by the Swiss banks, and if it does
pay, it will be told by Rionda that it ought not to have done so.
Standard has therefore proposed that all the parties should agree to
participate in the present action in order to resolve their disputes and that in
the meantime it pays to the Swiss banks the letter of credit payments against c
undertakings that they will repay Standard in the event that the court holds
that they were not entitled to payment. The Swiss banks, however, have
rejected that proposal.
It is necessary now to set out as briefly as I can the factual background to this
litigation and the details of the letters of credit. d
The underlying transactions

The background to this dispute is complex and to a large extent still unclear,
but I think it would assist any attempt to explain it if I referred to three layers
of transactions. The following account is taken from Rionda’s evidence and e
thus is provisional only.
The first layer comprises the historical business relationship between Rionda
and a Brazilian group known as the Dine Group or Grupo Dine, whose
principal was a Nelson Cury. Rionda is an old established and internationally
well-known sugar trader. The Dine Group owned three sugar mills in Brazil.
In 1993 Rionda commenced doing business with the Dine Group. In 1995 f
Rionda signed long-term purchase contracts for the shipment to it by the Dine
Group of 75,000 tonnes of sugar in each of 1996, 1997 and 1998. These
contracts were pre-financed against the security inter alia of pledges of sugar
cane and alcohol. Alcohol was produced by the sugar mills as a by-product of
sugar cane. The 1996 contract passed off successfully, but the 1997 contract g
was postponed at Mr Cury’s request into 1998. In 1997 two further, smaller,
sugar purchase contracts were pre-financed by Rionda against sugar
warehouse certificates, but only the first of them was fulfilled.
In December 1997 Rionda learned for the first time that all was not well with
the Dine Group. The workers from the sugar mills arrested sugar loaded for h
export under the Rionda contracts, seeking security for the non-payment of
their wages. It emerged that the Dine Group had a large cash flow problem.
To assist it, Rionda agreed to purchase 388,000 tonnes of sugar cane for
$US 4·2m, but managed to resell it for only $US 2·7m. It turned out that the
cane which Rionda purchased had already been pledged to it under its
long-term contracts. By March 1998 the Dine Group had lost all credibility j
with Rionda. It emerged that the same cane had been pledged several times
over to different parties. In July 1998 Rionda obtained through the assistance
of two Dine Group ex-employees, one of whom was Julio Llorente, its former
commercial and financial manager for international transactions, inside
information to the effect that the affairs of the Dine Group were wholly

fraudulent and that its workers had not been paid for some time. Rionda
a thereupon began proceedings in Brazil to protect its security. It emerged that
sugar cane which should have been in warehouse did not exist, and that the
tanks which ought to have contained alcohol held only water. Indeed, it is said
that Mr Cury himself admitted to the presence of water in order to forestall an
inspection which would have shown that the tanks had been built in such a way
b as to enable false readings of alcohol to be taken by supervising inspectorates.
In sum, Rionda fears that it may have been defrauded of security of 60,000
cubic metres of alcohol and 625,000 tonnes of sugar cane, worth an estimated
$US 25 to 30m, and that its total exposure on its transactions with the Dine
Group amounts to some $US 50m.
The second layer of transactions which I must mention concerns Rionda’s
c participation in 1997 with the Dine Group in importing alcohol for resale in
Brazil. These imports grew out of the Dine Group’s domestic involvement in
the production and thus sale of alcohol. Rionda was prepared to assist in the
financing of such imports. Rionda was told that the alcohol would be presold
and that such sales would generate repayment within 90 days of arrival in
d Brazil. The imports were transacted in the following way. An offshore
subsidiary of the Dine Group incorporated in the Cayman Islands called
Vivalet entered into purchase contracts for South African and Russian supplies
of alcohol. Vivalet then resold the alcohol to another Dine Group subsidiary,
this time one of its onshore companies, the seventh defendant Usina Santa Rina
S/A Acucar e Alcool (USR), which owned one of the sugar mills. This onsale
e was made at a significantly higher price, presumably to enable the Dine Group
to keep the uplift offshore. The sales to USR comprised five contracts
numbered A97-001–005. I shall refer to them as simply ‘the 001–005 contracts’.
As will appear below the 003, 004 and 005 contracts are critical to this litigation.
Rionda assisted in the financing of these imports by lending its name to the
f application for and opening of banking letters of credit. To do this, it became
a party to the 001–005 contracts as so-called ‘financial intermediary’. The
contracts contained a payment clause in essence as follows:
‘Rionda will open for account of USR a L/C in favor of Vivalet Limited
g for payment at 390 days from B/Ls date through [a nominated bank] to be
advised by an European bank to be indicated by USR.’
In effect therefore Rionda was acting as USR’s guarantor of the repayment of

the funds involved to the bank issuing the letter of credit, and was using its own
credit facilities with the banks to operate a letter of credit system of trade
h finance.
In the case of contracts 001 and 002 the nominated banks were respectively
Société Generale, NY, and Banque Worms, Paris, and the advising bank
already named in the clause was UEB. In the case of contracts 003, 004 and 005
the nominated bank was Standard and the advising banks came to be BCGe
j (contract 003) and UEB (contracts 004 and 005). The contracts also contained
provisions for securing Rionda and repaying the issuing bank. The costs of the
letter of credit were to be for USR’s account, the profit or loss on the purchase
and resale was to be solely for USR’s account, but Rionda was to be paid a fee
which varied from $US 150,000 in the case of contracts 001 and 002, to
$US 182,500 in the case of contracts 003 and 004, and to $US 550,000 on the first

52,000 tonnes shipped under contract 005. The fee was to be paid ‘upon
negotiation of the shipping documents’. a
It is said that the long period for the maturity of the letters of credit of 390
days from bill of lading date was because Brazilian law specified that imports
required a credit period of not less than one year. The contracts nevertheless
stipulated that repayments by USR would occur within 90 days of the date of
custom clearance: these moneys would then be kept on deposit with the b
issuing banks in Rionda’s name until maturity of the letters of credit. USR was
to provide to Rionda ‘prior to the opening of the L/C copy of the relevant
import license covering the imported alcohol.’
The sale by Vivalet to USR was of course an intra-group arrangement. As
has emerged (although there is an issue as to the extent to which Rionda knew
c
this) the letters of credit issued by banks such as Standard with whom Rionda
had credit facilities in turn supported other letters of credit under which the
non-group suppliers to Vivalet were to be paid. These other letters of credit
issued by the two Swiss banks were negotiated on behalf of Vivalet by a
company called Tradinter Ltd.
The three alcohol contracts with which I am particularly concerned are, as I d
have stated above, contracts 003, 004 and 005.
Contracts 003 and 004, dated 12 June 1997, were in identical terms, save that
contract 003 was for shipment in June and contract 004 was for shipment in July
1997, and each provided for the purchase of 15,000 tonnes (cubic metres) of
alcohol (5% more or less) in USR’s option at a price CFR Santos of $US 340 per e
cubic metre. Vivalet’s purchase in turn was from a Swiss company called Socef
SA under its contract no 893 dated 24 June 1997: that provided for the sale of
30,000 cubic metres (5% more or less) at Socef ’s option at a price c & f Santos
of $US 260 per cubic metre. Payment under the Socef contract was to be under
an irrevocable letter of credit for payment at 390 days from bill of lading date
against presentation of documents. The alcohol under these contracts was f
ultimately shipped on one vessel, the Hyde Park. The 003 contract goods were
shipped under bills of lading dated 9 July 1997 and totalled 15,662 cubic metres.
The 004 contract goods were shipped under bills of lading also dated 9 July
1997 and totalled 15,737 cubic metres. The goods were imported into Brazil,
but sales went slowly and the Dine Group failed to deposit full repayment g
within 90 days of the alcohol’s customs clearance, as had been promised.
Rionda, as it pleads in its points of claim, therefore ‘intervened in reasonable
mitigation of [its] loss by selling the alcohol and paying all warehousing and
transport costs.’
Contract 005 was for larger amounts of alcohol, namely 140,000 tonnes (5% h
more or less) at USR’s option to be supplied in six shipments spread between
October 1997 and August 1998. The October shipment was for 30,000 tonnes,
and the price CFR Santos was $US 368·29 per tonne. That price was subject to
review on later shipments. The contract was dated 7 August 1997, the same
day as Vivalet’s contract with Sasol Oil (Pty) Ltd (Sasol), which was for a
similar quantity and instalment programme. The price of the Sasol contract j
was FOB Durban at $US 285 per tonne, but was subject to review. It was
subsequently reduced to $US 250 per tonne. Payment under the Sasol contract
was to be by irrevocable letter of credit to be opened in respect of each
shipment providing for payment within seven days of bill of lading date. The
October instalment was shipped in part on the Chembulk Clipper on 23

October 1997 and in part on another vessel in November. Standard issued the
a letter of credit in respect of that half of this instalment which was shipped in
October on the Chembulk Clipper, a total of 15,750 tonnes. In this case, there
was a problem with import licences and the alcohol was refused clearance on
its arrival in Brazil, contrary to Mr Cury’s assurances. Contract 005, unlike
contracts 003 and 004, did not stipulate that a copy of the import licence would
b be provided prior to opening of the letter of credit, but only ‘as soon as
possible’. In the event the alcohol shipped to Brazil under contract 005 is still
at the ports of entry, uncleared. Rionda holds the warrants to such alcohol, but
is unable to act to protect its security because USR is the title holder and
importer. It seems that this alcohol may be considered as abandoned by USR
and subject to auction by the Brazilian state.
c I now turn to the third layer of transactions, which were the letters of credit
themselves.
The letters of credit

Contract 003 was financed by Standard under its letter of credit ILC 97/
d 00213—I shall refer to it as ‘L/C 213’. It was issued by Standard on the
application of Rionda on 3 July 1997. It was addressed to BCGe, and named the
beneficiary as Vivalet. Its expiry date was given as 31 July 1997. It was in the
amount of $US 5,100,000 (5% more or less). It was stated to be—
‘available by deferred payment at your counter’s payable at 390 days
e after date of bills of lading on board date for 100 per cent of the invoice
value, against presentation of the following documents …’
It instructed BCGe: ‘Please notify the beneficiary accordingly without
adding your confirmation’ and continued:
‘The negotiating bank is requested to forward documents by air courier
f
(at beneficiary’s cost) in one lot to: Standard Bank London Ltd …
accompanied by their reimbursement instructions. Upon receipt of your
tested telex confirming receipt of documents in compliance with the terms
and conditions of the letter of credit, your telex must evidence that you
have forwarded documents to ourselves by courier quoting relevant
g courier air waybill number, we shall pay you in accordance with your
instructions at maturity.’
The letter of credit stated that it was subject to the Uniform Customs and
Practice for Documentary Credits (1993 revision) (International Chamber of
Commerce publication no 500) (the UCP 500).
h On the strength of Standard’s letter of credit BCGe on 4 July 1997 issued its
own back-to-back letter of credit (DOC–100901) by order of Vivalet in favour
of Socef for an amount of $US 3,900,000 available by deferred payment at 390
days after bill of lading date. Its payment clause provided:
j ‘Upon receipt at our counters in Geneva of documents issued in strict

conformity with all terms and conditions of this documentary credit, we
herewith undertake to effect payment at maturity date, i.e. 390 days after
b/l date according to your instructions.’
On 21 July 1997 Standard amended its letter of credit to permit BCGe to add
its confirmation, which (subject to an item of documentary proof, I

provisionally find for present purposes that) it did on 22 July. On 25 July BCGe
received from Socef documentation, including an invoice for $US 4,072,139, a
‘En utilisation totale’ of BCGe’s back-to-back credit, together with a request
from Socef for discounting the deferred payment. On 28 July BCGe received
from Vivalet the latter’s own invoice, at the higher price of its resale to USR in
the amount of $US 5,325,105, ‘En negociation totale’ of Standard’s credit, and
on the same day BCGe telexed Standard to inform it of having received b
documents in full utilisation of the Standard credit, pointing out one
discrepancy and asking for authority to accept the documents despite the
discrepancy. On 1 August Standard replied, to confirm that Rionda had
accepted the discrepancy and that BCGe therefore had authority to accept the
documents as requested. On 4 August BCGe forwarded the documents to
Standard and requested acknowledgement of receipt and confirmation that c
Standard would cover BCGe at maturity date, viz 3 August 1998.
On the same day, 4 August, and before Standard’s reply, BCGe entered into
two discounting transactions. One was with Socef, in response to its request
to discount the sum due on maturity of the back-to-back credit in the sum of
$US 4,072,139. It therefore paid it, without recourse, $US 3,822,065 for value 6 d
August 1997. The other was with Vivalet, to whom it paid the discounted
value, in the sum of $US 1,148,334, of the $US 1,252,966 difference between the
value of L/C 213 on maturity and the sum due to Socef on maturity, also for
value 6 August. BCGe telexed Vivalet on 4 August that at maturity date, i e 3
August 1998, ‘and after receipt of funds from our correspondent’ it would
credit Vivalet’s account with the value of the documents less the amount e
already discounted that day.
On 6 August Standard replied to BCGe to say:
‘Please note the above presentation will mature for payment due 03 Aug
98 as per letter of credit terms and conditions. At maturity we shall effect
f
payment as per your instructions.’
This reflected the undertaking of the letter of credit.
Come the maturity date of 3 August 1998 the injunction of Tuckey J dated
31 July 1998 was in effect, so that no payment was made by Standard to BCGe
and no credit was made to Vivalet’s account. I assume, however, that on 3 g
August 1998 BCGe debited Vivalet’s account with the amount due under the
back-to-back letter of credit to Socef, namely $US 4,072,139. If Standard had
paid BCGe, the money would have merely recouped to BCGe what it had
already paid out to Socef and Vivalet on a discounted basis, and Vivalet’s
account would have been recredited with the $US 4,072,139. As it is, it is h
essentially BCGe which is out of funds, and Vivalet has long received the full
benefit of the transaction, both in the form of the alcohol and in the form of the
discounted payment of $US 1,252,966 ($US 1,148,334 net).
Contract 004 was financed by Standard under its letter of credit ILC 97/
00221—I shall refer to it as ‘L/C 221’. It was issued by Standard on the
application of Rionda on 30 June 1997. It was addressed to UEB, and likewise j
named the beneficiary as Vivalet, expired on 31 July 1997, and was in the
amount of $US 5,100,000 (5% more or less). It was materially in the same terms
as L/C 213, including the incorporation of UCP 500. The payment clause
originally provided for reimbursement at maturity only after receipt of
compliant documents by Standard but following amendment on 15 July 1997

provided in the same terms as L/C 213. UEB was also then invited to confirm
a the letter of credit, which it did on the next day, 16 July.
UEB similarly issued its own back-to-back letter of credit (LCIM 2023422) to
Socef, in the amount of $US 3,900,000, on 4 July. It received the shipping
documents from Socef on 24 July, who similarly requested discounting of the
sum of $US 4,091,620 due under the back-to-back credit. On 28 July it received
b Vivalet’s invoice in the sum of $US 5,350,580. On the same day it discounted
Socef ’s right to payment under the back-to-back credit by payment of
$US 3,830,121·14 net, for value that day. On 29 July it forwarded the
documents to Standard and telexed it in terms of the payment clause
requesting payment at maturity. On 31 July Standard responded to confirm
that it would do so. Then on 4 August, but for value 29 July, it too discounted
c Vivalet’s profit in the transaction, $US 1,258,960, by payment without recourse
of $US 1,138,973·76 net. Thus the position of UEB under L/C 221 was
essentially on all fours with that of BCGe under L/C 213. The only difference
was that come the maturity date of 3 August 1998, UEB did credit Vivalet with
the balance due under L/C 221 less the $US 1,258,960 which had been
d discounted, in reduction of a corresponding amount due by Vivalet to it.
As for contract 005, its first instalment of 15,000 tonnes was financed by
Standard under its letter of credit ILC 97/00260—I shall refer to it as ‘L/C 260’.
It was issued on 7 August 1997 addressed to UEB, which on 15 August added
its confirmation. The position here is essentially the same as under L/C 213
and L/C 221, save for the following. On this occasion the back-to-back letter
e of credit (UEB’s LCIM 2026625, issued on 14 August 1997) was in favour of
Sasol in the sum of $US 4,275,000, and the deferred maturity date was, in
accordance with the Sasol contract, only seven working days from bill of lading
date. The documents came forward to UEB on 11 November 1997, and Vivalet
added its invoice in the sum of $US 5,800,567·50 on 14 November. Certain
f discrepancies were identified, but Rionda instructed Standard to waive them.
On 19 November UEB discounted the full amount due to Vivalet under L/C
260 on maturity (viz 17 November 1998) by a payment without recourse of
$US 5,365,825·28. There was a slight hitch when Standard purported to reject
the documents for a further discrepancy on 24 November, but on 27
November it confirmed to UEB that ‘the above presentation has been accepted
g for payment due 98 11 17 as per letter of credit terms and conditions’.
As further security for BCGe and UEB, there were also assignments to them
by Vivalet of ‘all our rights, title, interest, and proceeds deriving from the sale
of the above cargo’. The question has been raised whether on the true
construction of these assignments, the letter of credit proceeds were part of
h those assignments as being ‘proceeds deriving from the sale’.
The proceedings
On 31 July 1998, a few days before the maturity date of 3 August 1998 under
L/Cs 213 and 221 and more comfortably before the maturity date of 17
j November 1998 under L/C 260, Rionda obtained two ex parte orders from
Tuckey J. One was an order restraining Standard from paying out under the
three letters of credit. The other was a worldwide Mareva injunction
restraining the second to eighth defendants to these proceedings, namely
Grupo Dine and other members of the Dine Group such as in particular Vivalet
and USR, from disposing of or dealing with their assets up to a value of

$US 50m and, it is to be noted, from seeking payment out under the three
letters of credit. a
BCGe and UEB were not made defendants to Rionda’s action, however, and
no relief was claimed against them.
Those orders were obtained on the basis of an affidavit of Mr Roger Spencer
of Rionda’s solicitors and of draft affidavits from Mr Matthew Scott, Rionda’s
senior vice president and from Mr Miguel Barg, Rionda’s executive vice b
president. Those draft affidavits were finally sworn a month later on 31 August
1998. Rionda gave an undertaking in damages in the usual way, save that it was
expressed to be in favour of third parties as well as the defendants. Tuckey J
did not require any security to be provided for that undertaking. In this
connection Mr Spencer stated that Rionda is—
c
‘an established and active trading house and the financing undertaken in
the circumstances of this case demonstrate[s] their creditworthiness with
several major banks.’
He then referred to the accounts for the year ending 30 September 1997 for
both Rionda and its major UK based subsidiary, saying that these accounts d
showed Rionda’s ability to comply with its undertaking in damages. Of course
those accounts would not have dealt with the transactions which are the
subject matter of these proceedings, but there was nothing in the rest of the
affidavit material put before the court to suggest that the troubles over such
transactions might have had a devastating or even material effect on Rionda’s
ability to respond to its undertaking if it had to. e
In Rionda’s points of claim, indorsed on the writ issued on the same day as
Tuckey J made his orders, Rionda pleaded that it had entered into the 003 and
004 contracts on 12 June 1997 and into the 005 contract on 7 August 1997, in
each case as financial intermediary, on the basis of fraudulent
misrepresentations on the part of the Dine Group inter alia regarding the cane f
and alcohol pledges. In the prayer, for the first time, rescission (or damages in
lieu) of the 003–005 contracts was claimed—albeit the pleading also stated, as I
have mentioned above, that Rionda had intervened in reasonable mitigation of
its loss to sell the alcohol under contracts 003 and 004. The cause of action
pleaded against Standard was an implied term as follows:
g
‘It was a term of the contract between [Rionda] and [Standard] for the
opening of the letters of credit that [Standard] would not pay out under the
letters of credit if they became aware that the financing they were intended
to provide to the Dine Defendants was induced by the fraud of the Dine
Defendants.’ h
Rionda accepted before me that the term there pleaded was alleged as an
implied term (the implied term) and was intended to reflect the fraud
exception. It may be noted that there is no reference in the pleaded
formulation to the need for the fraud to be either clear or established, nor as to
the quality of the bank’s awareness. j
Rionda also pleaded that Standard had been notified of the Dine Group’s
fraud on or about 29 July by means of the service on it of the draft affidavits of
Messrs Scott and Barg, and that Standard had threatened to pay out under the
three letters of credit. Mr Spencer’s affidavit evidenced a letter dated 29 July
from Standard’s solicitors stating inter alia as follows:

‘While our client is aware that there are problems relating to the Dine
a Group, which appears to be in financial difficulties, and it appears that the
relevant letters of credit may have been procured by fraud, our client has
accepted the letters of credit and is obliged to make payments under them.
Our client sympathises with your client but cannot fail to honour letters of
credit. Of course if a court order is obtained which has the effect of
b preventing our client from making payment, our client will honour that
court order.’
That evidence did not perhaps make clear Standard’s true attitude.
Certainly, there was no acceptance that a fraud had plainly occurred. There
was a suggestion, moreover, that in the absence of a court order it would feel
c obliged to make payment. On the other hand, what was not clear was whether
it would seek to oppose, inter partes, an order which prevented it carrying out
its obligation, or whether it would merely abide by any ex parte order that
Rionda might manage to obtain. Mr Spencer deposed that the allegations of
fraud against the Dine Group raised ‘a real issue to be tried’ between Rionda
d and Standard. He needed to say that in order to base an application for leave
to serve out against the Dine Group defendants as necessary or proper parties
under RSC Ord 11, r 1(1)(c): see r 4(1)(d).
What was really Standard’s attitude? On behalf of UEB, Mr Males QC
submitted that there was no proper disclosure about the background to
Rionda’s application and that the true position was that Standard was as keen
e as Rionda to see a court order. Mr Males also submitted that there was in truth
no real issue between Rionda and Standard and that these proceedings amount
to an abuse of process.
For these purposes Mr Males relied on the following facts which I regard as
sufficiently shown for present purposes. There has been considerable
f co-operation between Standard (and other banks financing Rionda) and Rionda
itself. On 23 July 1998, a week before Rionda’s action in England, Rionda
entered into a standstill agreement with its banks. (Although its use is
permitted in these proceedings, the standstill agreement is subject to a court
order of confidentiality made in proceedings in New York.) The standstill
g agreement, which came to an end in August 1998, provided a contractual stay
on Rionda’s obligations, including its considerable unsecured obligations, to
Standard and other banks. The significance of that agreement to Rionda, and
the difficulties in which Rionda had found itself as a result of its transactions
with the Dine Group, has been the subject of a deposition given by Mr Barg in
New York proceedings. He there mentioned the standstill agreement, and
h when asked if Rionda would have been insolvent without it replied by
demurring about insolvency but accepting that ‘Maybe we would have
trouble … We would have more trouble to operate …’ Mr Barg also accepted
that Rionda had made a cash flow presentation to its banks and that one of the
items in such cash flows had been a figure for litigation: the banks had agreed
j to such figures and to the litigation itself (which includes these proceedings)
and also agreed that the banks would look to the proceeds of such litigation in
repayment of Rionda’s obligations to them.
Moreover, in December 1998 Rionda resisted the posting of security in New
York proceedings in the sum of $US 273,500 on the ground that it would be a
‘burden’ to it and that its September 1997 accounts were out of date and did

not reflect ‘the substantial losses suffered’ as a result of the Dine Group
transactions. a
Other matters of non-disclosure of which Mr Males complained were
concerned with the extent of disclosure about the nature of UEB’s involvement
in the transactions. In essence such disclosure was confined to what was said
by Mr Spencer in paras 13 and 14 of his affidavit. While para 13, which was
expressly drawn to Tuckey J’s attention, referred to letters from UEB alleging b
that it had given ‘back-to-back finance’, it was not made clear that UEB had
confirmed Standard’s letters of credit, or that in practice Vivalet had already
obtained the benefit of them and that UEB would use the proceeds from
Standard to reimburse itself, or indeed that UEB had negotiated and Standard
had already accepted the relevant shipping documents. It is in dispute whether
Rionda knew of the detail of the back-to-back credit arrangements, and I shall c
revert to this below.
Finally, Mr Males complained that there had been no disclosure of the
payment by Rionda to Mr Llorente, in connection with evidence he supplied
to it about the Dine Group’s misdeeds, of sums totalling $US 36,000 in the form
of ‘consulting fees’. In his deposition, Mr Barg described these payments as a d
loan or ‘gentleman’s agreement’, which has not been evidenced in writing.
UCP 500
I should mention here certain provisions of the UCP 500 which have been
the subject of submission.
e
Articles 3 and 4 emphasise the established law that credits are separate
transactions from the sales or other contracts on which they may be based, that
banks are in no way concerned or bound by such contracts, and thus that the
undertaking of a bank to pay or negotiate or fulfil any other obligation under
the credit is not subject to claims or defences by the applicant resulting from
his relationship with issuing bank or beneficiary. f
Article 10 refers to four types of credit, including a credit available ‘by
deferred payment’ and a credit available ‘by negotiation’. It is common ground
that the three letters of credit in this case were deferred payment credits. It is
in dispute whether they were also, or could be also, negotiation credits. Article
10 provides: g
‘(a) All Credits must clearly indicate whether they are available by sight
payment, by deferred payment, by acceptance or by negotiation. (b) …
(ii) Negotiation means the giving of value for Draft(s) and/or document(s)
by the bank authorised to negotiate. Mere examination of the documents
without giving of value does not constitute a negotiation … (d) By h
nominating another bank, or by allowing for negotiation by any bank, or
by authorising or requesting another bank to add its confirmation, the
Issuing Bank authorises such bank to pay, accept Draft(s) or negotiate as
the case may be, against documents which appear on their face to be in
compliance with the terms and conditions of the Credit and undertakes to j
reimburse such bank in accordance with the provisions of these Articles.’
As a result of Mr Males’ submissions on behalf of UEB, there was argument
before me as to whether UEB was entitled to treat Standard’s credits as credits
by negotiation; and whether the fraud exception operated under a deferred
payment credit at any time up to the maturity date, or only up to such time as

the nominated or confirming bank may have committed itself to payment,

a either by accepting the documents as good documents under the credit or by
discounting the payment due on maturity. I shall revert to such questions
below.
Balance of convenience
b I come back to the question of balance of convenience. On BCGe’s and
UEB’s case, a claim for an interlocutory injunction against a bank which has
issued a letter of credit must always fail at this point, even if a case of clear fraud
can otherwise be made out. On Rionda’s and Standard’s case, on the other
hand, such a case ought always to succeed, provided of course that a
sufficiently good arguable case of clear fraud has been established for the
c purposes of a pre-trial injunction.
This is a remarkable divergence, and it has to be said that on the whole the
authorities strongly support the former position. Rionda’s and Standard’s
argument in favour of an injunction proceeds, however, on the basis of a
submission that in recent years two matters have become clear, or at any rate
d clearer: first, that the real jurisdictional basis of the fraud exception whereby a
bank is not obliged to comply with what would otherwise be its letter of credit
(or performance guarantee) obligation is not so much (or as Rionda would
prefer to say, not merely) a substantive right of action against the bank, but the
interest of the law in not allowing a fraud to succeed; and secondly, that where
a cause of action against one party can be shown in fraud, an injunction against
e another party may proceed merely on the ground that the first party is mixed
up in the fraud. That, it is said, breaks the iron grip of Kerr J’s logic that either
a letter of credit applicant has a substantive cause of action against a bank, in
which case he does not need the protection of an injunction, or he does not
have such a cause of action against the bank, in which case he is not entitled to
f an injunction.
As for the first of these two matters, Mr Strauss for Standard, with the
support of Mr Philipson for Rionda, drew attention to the following
authorities. In United City Merchants (Investments) Ltd v Royal Bank of Canada
[1982] 2 All ER 720 at 725, [1983] AC 168 at 184 Lord Diplock described the
fraud exception in these terms:
g
‘The exception for fraud on the part of the beneficiary seeking to avail
himself of the credit is a clear application of the maxim ex turpi causa non
oritur actio or, if plain English is to be preferred, “fraud unravels all”. The
courts will not allow their process to be used by a dishonest person to carry
out a fraud.’
h
In Bolivinter Oil SA v Chase Manhattan Bank [1984] 1 Lloyd’s Rep 251 at 254
Donaldson MR referred to the ‘admirable skeleton’ of Mr Nicholas Phillips QC
(as he then was) as putting forward the following propositions, which I have
numbered for convenience:
j ‘[1] The Court should grant an injunction restraining payment under a
letter of credit or performance guarantee where the result of payment is
likely to be to permit the ultimate beneficiary to profit from his own fraud
at the expense of the Plaintiff … [2] The basis of the jurisdiction is not the
power of the Court to grant an injunction restraining a breach of contract.
The Plaintiff does not have to establish that the payment enjoined would

constitute a breach of contractual duty owed to the Plaintiff by the Bank.

The basis of the jurisdiction is wider—the power of the Court to intervene a
where necessary to prevent fraud. The Plaintiff has to show that his legal
rights are threatened by the fraud of the beneficiary. [3] An injunction
should be granted provided that a sufficient case of fraud is made out to
the satisfaction of the Court …’
b
Mr Strauss submits that these propositions were approved by the Court of
Appeal in the Bolivinter case and prays in aid the opinion of Phillips J himself to
that effect in Deutsche Ruckversicherung AG v Walbrook Insurance Co Ltd [1994] 4
All ER 181 at 195, [1995] 1 WLR 1017 at 1030, at any rate so far as propositions
1 and 2 are concerned.
c
In the Deutsche case Phillips J was not concerned with a claim against a bank,
but against a beneficiary of a letter of credit. Nevertheless, he held, classically,
that the rule against interference save in the case of a clear case of fraud applied
equally to a beneficiary’s claim for an injunction, as to a bank’s ([1994] 4 All ER
181 at 196–197, [1995] 1 WLR 1017 at 1030–1031). On the facts, he held that
although a clear prima facie case of fraud had been shown, nevertheless the d
plaintiff reinsurers had not made out a clear case that they were entitled to
avoid their policy and therefore that the reinsured beneficiaries of the letter of
credit would be acting fraudulently in drawing on the letter of credit. He
therefore dismissed the reinsurers’ claim for a pre-trial injunction restraining
the reinsured from so doing (see [1994] 4 All ER 181 at 200, [1995] 1 WLR 1017
e
at 1035). For these purposes he had considered the nature of the cause of action
for such an injunction (see [1994] 4 All ER 181 at 194–196, [1995] 1 WLR 1029–
1030). He cited Lord Diplock’s dictum from the UCM case above, and referred
to his own propositions 1 and 2 from the Bolivinter case as there having the
support of the Court of Appeal. He also referred to Ackner LJ’s remark in the
UTC case [1985] 2 Lloyd’s Rep 554 at 561 to the effect that in America, which f
was the source of the fraud exception, it was not necessary for a plaintiff to
demonstrate a cause of action against a bank.
Mr Strauss therefore submitted on the basis of these authorities that no
cause of action against a bank was necessary for an injunction to restrain a bank
from making, or a beneficiary from receiving, payment under a letter of credit g
in a case where fraud was sufficiently shown. As such, this was an exception to
the strict view that every injunction must be supported by a substantive cause
of action in the form of a legal or equitable right (see Siskina (cargo owners) v
Distos Cia Naveria SA, The Siskina [1977] 3 All ER 803, [1979] AC 210). He
referred to the possibility of exceptions to the Siskina principle indicated by
Lord Goff of Chieveley in South Carolina Insurance Co v Assurantie Maatschappij h
‘de Zeven Provincien’ NV, South Carolina Insurance Co v Al Ahlia Insurance Co
[1986] 3 All ER 487 at 499, [1987] AC 24 at 44–45 and by Lord
Browne-Wilkinson in Channel Tunnel Group Ltd v Balfour Beatty Construction Ltd
[1993] 1 All ER 664 at 670, [1993] AC 334 at 343.
As for the second of the two matters which form the basis of these j
submissions, Mr Strauss relied on Norwich Pharmacal Co v Customs and Excise
Comrs [1973] 2 All ER 943, [1974] AC 133 and Mercantile Group (Europe) AG v
Aiyela [1994] 1 All ER 110, [1994] QB 366. As he put it, if s 37(1) of the Supreme
Court Act 1981 founds the court’s jurisdiction to order a defendant to disclose
documents or information merely because he is innocently involved in

another’s wrongdoing, a fortiori there must be jurisdiction to prevent him

a from doing an act, however innocently, which would further wrongdoing.
In my judgment, whatever might be the future development of the Siskina
principle and its exceptions, or the ramifications of the Norwich Pharmacal
principle, it is necessary to consider the letter of credit and performance
guarantee cases to see whether Mr Strauss’s submissions are consistent with
b them.
As far as I am aware the fraud exception first makes its appearance on the
English stage in Discount Records Ltd v Barclays Bank Ltd [1975] 1 All ER 1071,
[1975] 1 WLR 315. There Megarry J referred to what Lord Diplock in the UCM
case [1982] 2 All ER 720 at 725, [1983] AC 168 at 183 later called the ‘landmark’
American case of Sztejn v J Henry Schroder Banking Corp (1941) 31 NYS 2d 631.
c Megarry J noted the distinction between the mere allegation of fraud in his case
and the establishment of fraud (as a matter of assumption) in Sztejn’s case; as
well as the assumption in the Sztejn case that the bank was merely an agent for
the fraudulent seller. On the facts before Megarry J, however, it appeared as
possible as not that the allegedly fraudulent sellers had already been paid by
d discounting of a draft not yet due, so that: ‘All that the injunction would do
would be to prevent the banks concerned from honouring their obligations’
([1975] 1 All ER 1071 at 1075, [1975] 1 WLR 315 at 320).
The claim to an injunction appears to have been premised on a breach of
contract by the bank, for Megarry J remarked that the plaintiff would in any
event have his claim against the bank. An injunction was refused.
e An injunction was again refused in the Harbottle case. The only relief
claimed against the bank was an injunction. Kerr J doubted the jurisdictional
propriety of using such a claim against an English bank in order to bring in as
necessary or proper parties an Egyptian bank and the Egyptian sellers ([1977] 2
All ER 862 at 868, [1978] QB 146 at 154). There then followed the passage
regarding the ‘insuperable difficulty’, which I have already cited. Kerr J
f
concluded:
‘Except possibly in clear cases of fraud of which the banks have notice,
the courts will leave the merchants to settle their disputes under the
contracts by litigation or arbitration as available to them or stipulated in
g the contracts. The courts are not concerned with their difficulties to
enforce such claims; these are risks which the merchants take. In this case
the plaintiffs took the risk of the unconditional wording of the guarantees.
The machinery and commitment of banks are on a different level. They
must be allowed to be honoured, free from interference by the courts.
Otherwise trust in international commerce could be irreparably damaged.’
h (See [1977] 2 All ER 862 at 870, [1978] QB 146 at 155–156.)
A few months later in Edward Owen Engineering Ltd v Barclays Bank
International Ltd [1978] 1 All ER 976, [1978] QB 159 the Court of Appeal
approved the Harbottle case and again refused to give an injunction. The fraud
exception was recognised in these terms:
j
‘That case [Sztejn’s case] shows that there is this exception to the strict
rule; the bank ought not to pay under the credit if it knows that the
documents are forged or that the request for payment is made fraudulently
in circumstances where there is no right to payment.’ (See [1978] 1 All ER
976 at 982, [1978] QB 159 at 169 per Lord Denning MR.)

‘That exception is that where the documents under the credit are
presented by the beneficiary himself and the bank knows when the a
documents are presented that they are forged or fraudulent, the bank is
entitled to refuse payment.’ (See [1978] 1 All ER 976 at 984, [1978] QB 159
at 172 per Browne LJ.)
‘The only circumstances which would justify the bank not complying
with a demand … is this, if it had been clear and obvious to the bank that b
the buyers had been guilty of fraud.’ (See [1978] 1 All ER 976 at 986, [1978]
QB 159 at 175 per Geoffrey Lane LJ.)
It may be observed that the fraud exception is there stated in narrow terms.
The plaintiff relied on Mareva Cia Naviera SA v International Bulkcarriers Ltd
c
[1975] 2 Lloyd’s Rep 509 and The Siskina [1977] 3 All ER 803, [1979] AC 210 at
the Court of Appeal level before it had been reversed in the House of Lords;
but Lord Denning MR saw no assistance in such cases.
In the UCM case the House of Lords held that the presentation of fraudulent
documents did not come within the fraud exception unless the beneficiary was
privy to the fraud. Lord Diplock himself expressed the fraud exception, by d
reference to Sztejn’s case and the Edward Owen case, in narrow terms, thus:
‘… where the seller, for the purpose of drawing on the credit,
fraudulently presents to the confirming bank documents which contain,
expressly or by implication, material misrepresentations of fact that to his
knowledge are untrue.’ (See [1982] 2 All ER 720 at 725, [1983] AC 168 at e
183.)
Although the requirement of the knowledge of the bank of the beneficiary’s
fraud was not specifically referred to by Lord Diplock in that dictum, it was
implicit in the argument before the court and in Lord Diplock’s citation with
approval of the Sztejn and Edward Owen cases. When, therefore, Lord Diplock f
stated that the fraud exception was an application of the doctrine that ‘fraud
unravels all’, he was not, in my respectful opinion, speaking as broadly as might
be thought. It would be less pithy but more accurate to fill out the dictum by
saying that fraud unravels the bank’s obligation to act on the appearance of
documents to be in accordance with a credit’s requirements provided that the g
bank knows in time of the beneficiary’s fraud.
In Bolivinter Oil SA v Chase Manhattan Bank [1984] 1 Lloyd’s Rep 251 an
injunction was again refused, but on the facts, in the absence of the showing of
a clear case of fraud. The Edward Owen and UCM cases were treated as the
leading cases. In the circumstances I do not, with diffidence and respect, feel h
able to agree with Phillips J’s view in the Deutsche case that his skeleton’s
propositions 1 and 2 were accepted. It is plain that his third proposition was
not: Donaldson MR (at 256) expressly stated that he was not prepared to
determine the point about when knowledge of the fraud had to be obtained.
Neither, it seems to me, was his first proposition, for that made no reference at
all for the need for any knowledge by the bank. I do not see, therefore, why it j
should be considered that the second proposition was accepted either. On the
contrary, since the Edward Owen case had in turn approved the Harbottle case,
it is difficult to see why the Bolivinter case should be viewed as authority in
support for a much more flexible approach to the granting of an injunction.
Indeed, Donaldson MR’s judgment concluded (at 257) with a famous, oft cited

passage, which emphasised the ‘wholly exceptional’ nature of any such

a injunction. He there distinguished between an injunction against a bank, and
an injunction which merely imposes restrictions on a beneficiary to deal with
the money after he has received it. He also expressed the fraud exception in
this well-known sentence: ‘But the evidence must be clear, both as to the fact
of fraud and as to the bank’s knowledge.’
b Subject to that, there are however two points that may be made about the
Bolivinter case. One is that Donaldson MR (at 256) appears to accept that the
right of a bank, applying the fraud exception, to refuse payment may be
‘extra-contractual’. The other is that at any rate the possibility of an injunction,
however exceptional, is contemplated where it is proved that the bank knows
that a demand for payment is fraudulent (at 257).
c
In the UTC case [1985] 2 Lloyd’s Rep 554 the nature of the jurisdiction to
grant an injunction to prevent performance of a letter of credit (or, as in that
case, a performance guarantee) was considered by the Court of Appeal. It was
common ground that, by reason of The Siskina, an injunction could only be
granted in aid of a cause of action against the injuncted party. The court
d considered the possible candidates for a cause of action. The particular
difficulty for the plaintiff in that case was that it was not in contractual relations
with the bank in question, Rafidain. It appears to have been accepted that, if
Rafidain could not be injuncted, then the plaintiff ought not to be in a better
position to prevent performance of the counter-guarantees provided by a chain
e of intermediate banks, ending in the plaintiff ’s own bank, Allied Arab Bank. An
arguable cause of action in tort was accepted by the banks (at 560) on the basis
of Anns v Merton London Borough [1977] 2 All ER 492, [1978] AC 728, but in the
light of further developments in the law of negligence since that time I am
doubtful whether such an argument would be accepted today, and none of the
parties before me spoke in its favour (cf Jack’s Documentary Credits (2nd edn,
f 1993) p 225, para 9.34). As for the position between the plaintiff and its own
bank, the Court of Appeal in the UTC case [1985] 2 Lloyd’s Rep 554 at 565–566
cited and applied, under the heading of ‘balance of convenience’, Kerr J’s
doctrine from the Harbottle case. It did so, even though the court recognised
the financial difficulties in which the plaintiff would then find itself.
g This case is also the locus classicus for the elucidation of the standard of
proof required to make good a case of fraud, both at trial and at the stage of
requesting a pre-trial injunction (at 561). At trial the test is: ‘If the Court
considers that on the material before it the only realistic inference to draw is
that of fraud, then the seller would have made out a sufficient case of fraud.’
At the pre-trial stage the test therefore becomes:
h
‘Have the plaintiffs established that it is seriously arguable that, on the
material available, the only realistic inference is that [the beneficiary]
could not honestly have believed in the validity of its demands on the
performance bonds?’ (This is later (at 565) glossed as ‘a good arguable
j case’.)
In the result, the plaintiff failed to obtain an injunction on two separate

grounds: first, it failed to establish a good arguable case that the only realistic
inference was that the beneficiary’s demand was fraudulent; and secondly, it
failed on balance of convenience (see [1985] 2 Lloyd’s Rep 554 at 565 and 566).

Kerr J’s analysis was again applied by the Court of Appeal in GKN Contractors
Ltd v Lloyds Bank Ltd (1985) 30 Build LR 48 at 64, where again it was assumed a
that the plaintiff would either have a claim in breach of contract against its own
bank or no claim at all.
In Tukan Timber Ltd v Barclays Bank plc [1987] 1 Lloyd’s Rep 171 the plaintiff
sought an injunction against its own bank to prevent payment out under a
letter of credit. The bank had already twice rejected a demand on the ground b
of forgery. Hirst J was therefore prepared on the evidence to accept that the
beneficiary’s fraud to the knowledge of the bank had been sufficiently proved.
Even so, he refused an injunction on two grounds. The first was that he did
not consider there to be any danger that the bank would pay out at any third
attempt by the beneficiary. The second was on the basis of the balance of
convenience considerations referred to in the Harbottle and UTC cases. Hirst J c
(at 177) said that the plaintiff would have ‘a cast-iron claim … for breach of
contract’ against the bank, if it did pay.
In Themehelp Ltd v West [1995] 4 All ER 215, [1996] QB 84, on the other hand,
an injunction was granted against the beneficiary of a performance guarantee
on the grounds first, that a clear case of fraud had been sufficiently shown for d
pre-trial purposes, and secondly, that the beneficiary had not yet made a
demand under the guarantee. The majority of the court, Balcombe and
Waite LJJ, regarded the fact that the defendant was the beneficiary, together
with this second ground, as entitling them to step outside the previous cases
and their limitations. Thus Waite LJ said:
e
‘The present case [in the opinion of the judge at first instance] was
exceptional, in that here the relief was sought at an earlier stage—that is to
say a restraint against the beneficiary alone in proceedings to which the
guarantor is not a party, to prevent the exercise by the beneficiary of his
power to enforce the guarantee by giving notice of the other party’s
alleged default in discharging the liability which was the subject matter of f
the guarantee. Before him (as before this court) it was common ground
that there is no authority deciding whether an application of that nature is
one which the court has power to grant by law, and if so what principles
should be applied to it.’ (See [1995] 4 All ER 215 at 225, [1996] QB 84 at 97.)
g
Then Waite LJ addressed the minority view of Evans LJ, saying:
‘The assumption upon which this argument proceeds is that the
autonomy of a performance guarantee is threatened if the beneficiary is
placed under a temporary restraint from enforcing it. That is not an
assumption, however, which appears to me to have any validity. In a case h
where fraud is raised as between the parties to the main transaction at an
early stage—before any question of the enforcement of the guarantee (as
between the beneficiary and the guarantor) has yet arisen at all—it does
not seem to me that the slightest threat is involved to the autonomy of the
performance guarantee if the beneficiary is injuncted from enforcing it in j
proceedings to which the guarantor is not a party.’ (See [1995] 4 All ER
215 at 227, [1996] QB 84 at 98–99.)
I have already cited at the outset of this judgment the passage in which
Waite LJ dealt with the balance of convenience (see [1995] 4 All ER 215 at 229,
[1996] QB 84 at 100–101). Of course, once it is concluded that a claim against

a beneficiary alone at an early stage lies outside the principles decided in

a previous cases involving claims against a bank at a later stage, it should perhaps
come as no surprise that, where a provisional case of clear fraud is established,
the court should find that there is a balance of convenience in favour of an
injunction.
In his dissenting judgment Evans LJ emphasised that the case did not come
b within the fraud exception, summarising his position in this way:
‘(7) For these reasons, in my judgment, the injunction is contrary to legal
principle and the appeal should be allowed. In summary, the two essential
reasons are (i) the contract remains binding, even if the plaintiffs’
allegation that they were induced to enter into it by fraudulent
c misrepresentation by the defendants is sufficiently proved, and (ii) there is
no finding or evidence that the fraud exception defence will be available to
the banks, if payment is demanded under the guarantees.
Notwithstanding the alleged fraud “in relation to” the SSA, once the
contract is affirmed or can no longer be avoided, the defendants are
entitled to claim payment in accordance with its terms.’ (See [1995] 4 All
d ER 215 at 230, [1996] QB 84 at 102.)
On the other hand, Evans LJ considered that Mareva relief would have been
entirely appropriate. He said:
‘(9)(i) The present case cries out for Mareva relief. This could extend, if
e necessary, to requiring payment into court of whatever sums are due from
the banks: see United Norwest Co-operatives Ltd v Johnstone [1994] CA
Transcript 1482. The plaintiffs suggest that the defendants may have other
creditors and may be or become insolvent. That does not give them a
valid reason for withholding a payment which is otherwise due, and it is
f no part of the Mareva jurisdiction to give priority over other creditors (see
Iraqi Ministry of Defence v Arcepey Shipping Co SA (Gillespie Bros & Co Ltd
intervening), The Angel Bell [1980] 1 All ER 480, [1981] QB 65). It is not
sufficient, in my judgment, to consider whether the defendants or the
plaintiffs should be out of pocket pending the trial. This is because there
is a binding contract between them, which requires the sums to be paid,
g even in the circumstances which have arisen (subject to rights of set-off,
upon which the plaintiffs do not rely: compare Potton Homes Ltd v Coleman
Contractors Ltd (1984) 28 Build LR 19). In my judgment, the injunction is
an unwarranted extension of the Mareva jurisdiction.’ (See [1995] 4 All ER
215 at 231, [1996] QB 84 at 103.)
h
Themehelp Ltd v West was heard and decided in the period between the
Deutsche case’s appearance in the Commercial Court before Phillips J and its
appearance in the Court of Appeal ([1996] 1 All ER 791, [1996] 1 WLR 1152). I
have already set out the reliance that Mr Strauss places on the judgment of
Phillips J, and my concern that Phillips J was mistaken to say that his
j propositions 1 and 2 in the Bolivinter case were there accepted. Also of interest
is the fact that Phillips J rejected a submission that a different test applied to an
application to restrain a beneficiary as distinct from a bank ([1994] 4 All ER 181
at 196–197, [1995] 1 WLR 1017 at 1030–1031). Phillips J’s judgment was not,
however, cited in Themehelp Ltd v West, where that submission was common
ground. Even so, his analysis to the effect that the fraud exception can only

apply where the plaintiff has rescinded his contract with the beneficiary for
fraud, or where at the pre-trial stage he can at least show a good arguable case a
that he has done so and therefore that the beneficiary would be acting
fraudulently in drawing on the credit, is consistent with the views expressed by
Evans LJ in his dissenting judgment.
In the Deutsche case in the Court of Appeal, in a passage ([1996] 1 All ER 791
at 801, [1996] 1 WLR 1152 at 1161–1162) which I have already cited at the b
outset of my judgment, Staughton LJ also pointed out that the distinction
between restraining a beneficiary from drawing on a credit and restraining a
bank from making payment under it was contrary to established doctrine. The
plaintiff failed in the Court of Appeal again, this time on the prior point that no
case of non-disclosure or misrepresentation such as would even support a
claim to rescind had been made good. Thus the allegation of fraud failed at the c
outset.
Finally, Turkiye Is Bankasi AS v Bank of China [1996] 2 Lloyd’s Rep 611
concerned a final trial in which the Bank of China (BOC) resisted Turkiye’s
claim on a counter-guarantee, after Turkiye had paid out under its own
performance bond. The claim succeeded on the ground that BOC had failed to d
bring itself within the fraud exception, i e to show that Turkiye knew of the
beneficiary’s fraud, as at the time of Turkiye’s payment. Although an analysis
of the defence, other than as a reliance on the fraud exception, does not appear
from the judgment of Waller J, it would appear to have been that it was an
implied term of the counter guarantee either that Turkiye’s bond would not be
paid where Turkiye had clear proof of the beneficiary’s fraud or that BOC’s e
counter-guarantee would not operate in such a case.
The context of a final trial on the effect of the fraud exception is
comparatively rare. In that context it is interesting to see what Waller J (at 617)
had to say about the test of fraud:
f
‘It is simply not for a bank to make enquiries about the allegations that
are being made one side against the other. If one side wishes to establish
that a demand is fraudulent it must put the irrefutable evidence in front of
the bank. It must not simply make allegations and expect the bank to
check whether those allegations are founded or not … [It] is not the role
of a bank to examine the merits of allegations … of breach of contract. To g
hold otherwise would place banks in a position where they would in effect
have to act as Courts in deciding whether to make payment or not. Of
course, if a beneficiary were to admit to the bank that it had no right to
make the demand, then a totally different situation would arise.’
h
In the light of these authorities, it seems to me that, even if I assume for the
sake of argument that Rionda has otherwise brought itself within the fraud
exception, its claim against Standard for a pre-trial injunction must fail on the
balance of convenience alone. I would seek to put the matter in the following
way.
(1) The interest in the integrity of banking contracts under which banks j
make themselves liable on their letters of credit or their guarantees is so great
that not even fraud can be allowed to intervene unless the fraud comes to the
notice of the bank (a) in time, i e in any event before the beneficiary is paid, and
(b) in such a way that it can be said that the bank had knowledge of the fraud.
Whether that interest is viewed in terms of the importance that must be

attached to the honouring of banking commitments, or in terms of the

a lifeblood of commerce and in particular international commerce, it has been
amply recognised in case after case. Unless the banking commitment can be
insulated from disputes between merchants, international trade would become
impossible.
(2) If it were simply a matter of claim between two merchants who are in
b contractual relations with one another, let us say a buyer and a seller, no special
rules would be necessary. A good arguable claim for relief by a buyer, alleging
fraud, against a seller, could be dealt with on normal principles. Once,
however, a letter of credit arrangement has been set up, the special rule that
only the fraud exception permits interference comes into play.
c (3) Thus, in the absence of the fraud exception, a buyer can no more seek to
prevent his seller from drawing on the letter of credit for which the seller has
stipulated than the buyer can seek to prevent his bank from making payment
under it. The reason is that otherwise the special rule could be subverted, and
the integrity and insulation of banking contracts could be overthrown, simply
by the device of injuncting the beneficiary rather than the bank. The
d formulation of the fraud exception, to the extent that it requires the timely
knowledge of the bank and not merely that of the beneficiary (who, ex
hypothesi knows of his own fraud), emphasises the distinctiveness of this rule.
In this connection, Themehelp Ltd v West represents either a genuine distinction,
based on the fact that the claim against the beneficiary alone was brought at an
early stage, well before the question of enforcement of the guarantee arose; or
e
the decision must be regarded as undermined by the concession there that a
claim against a beneficiary, as distinct from a claim against a bank, was not
covered by prior authority. In any event, the present case, although it involves
a claim against the beneficiary, USR, also involves a claim against a bank,
Standard, and does not come at an early stage, but long after negotiation of
f documents and transfer of the goods, and is therefore not within any Themehelp
exception.
(4) An additional dimension of complexity is superimposed by the fact that
a final decision on the beneficiary’s alleged fraud cannot be reached at a merely
pre-trial hearing. Of course, the fraud exception is framed in such terms,
g requiring the fraud to be clear and to come to the timely knowledge of the
bank, that in one sense there ought not to be a difference between the pre-trial
application and the final trial. But life and the law are not perhaps as simple as
that, and the difference between the tests formulated for the pre-trial stage and
for final trial emphasise the difficulty. However, the fact that the claimant gets
the benefit of a lower standard of proof for the purposes of a pre-trial hearing,
h places on the court, as I believe the cases demonstrate, an additional
requirement to be careful in its discretion not to upset what is in effect a strong
presumption in favour of the fulfilment of the independent banking
commitments.
(5) It is in this context that one comes to Kerr J’s ‘insuperable difficulty.’
j The same considerations that compel the narrowness of the exception which
the courts have allowed to the fulfilment of the banking commitments
continue to operate at the level of balance of convenience. A short answer to
the submission of Rionda and Standard before me is, therefore, that the
approach of Kerr J in the Harbottle case has not only his own authoritative
guidance but is, I believe, binding on me in the form of its express application

by the Court of Appeal in both the UTC and GKN cases. It was also applied by
Hirst J in Tukan Timber Ltd v Barclays Bank plc. Moreover, the Harbottle case was a
in general approved by the Court of Appeal in the Edward Owen case.
(6) As for Mr Strauss’s attack on the premise that an applicant either has a
valuable remedy for breach of contract against a bank or no cause of action for
an injunction at all, Mr Strauss would prefer to say that there was no remedy
in contract at all, whereas Mr Philipson would prefer to say that there was. I b
am inclined to think that Mr Philipson is right about this, for I do not see how
payment in the face of fraud can be a mere matter of discretion by a bank: it
must be either within its mandate or not, and either a matter of obligation or
not. It seems to me that the passage from the Harbottle case supports that view,
as does its adoption in the UTC case, and the reference in Tukan Timber Ltd v c
Barclays Bank plc by Hirst J to a ‘cast-iron claim’ is particularly in point.
Megarry J in Discount Records Ltd v Barclays Bank Ltd also seems to have been of
the view that the claim is based in contract. Moreover, if it is not a matter of
contract, why should the claimant be entitled to any injunction? Mr Strauss
and Mr Philipson say, because no cause of action is needed, the defrauded
claimant is entitled to the court’s protection in any event. But it seems to me d
that there is ultimately nothing in the authorities to require such a view. It is
prima facie contrary to the Siskina doctrine and has been treated as such in the
cases (not least in the UTC case). The fact that the rationale of the fraud
exception is the law’s prohibition on the use of its process to carry out fraud
(per Lord Diplock in the UCM case) may appropriately be viewed as an e
authoritative expression of the source in law of the implied limitation on a
bank’s mandate. I accept that in the Deutsche case Phillips J raised the question
whether it is necessary for the claimant to have any cause of action, and sought
to answer it in the negative by reference to the acceptance of his propositions
in the Bolivinter case; but I have already ventured to suggest that Donaldson
MR’s judgment in the Bolivinter case does not support that view of the matter. f
If the source of the power to injunct were purely the law’s interest in
preventing the beneficiary from benefiting from his own fraud, I do not see
why there should be the added requirement that the fraud be patent to the
bank.
(7) Let me suppose, however, that I am wrong about that and Mr Strauss is g
right to say that a pre-trial injunction in aid of the fraud exception is,
jurisdictionally speaking, itself an exception to the Siskina principle and reflects
the concern of the law to protect a defrauded claimant even against a defendant
bank which is merely mixed up in a third party’s wrongdoing, as in Norwich
Pharmacal Co v Customs and Excise Comrs or Mercantile Group (Europe) AG v Aiyela. h
Even on that hypothesis, however, the balance of convenience would seem to
me to come down firmly in favour of the bank. Ex hypothesi, the bank would
be entitled, in the absence of an injunction, to pay the beneficiary and would
not be in breach of contract to the claimant in doing so. Why, therefore,
should the interests of the claimant overtop the public and general interests in
the maintenance of banking commitments and in the autonomy of such j
commitments? The preference of concern about the private loss of the
defrauded claimant to the general weal might arguably in a particular case fall
in favour of the former, if the claimant could be in no other way protected. But
it seems to me that the presence of the Mareva injunction or freezing order,
which the courts can grant in a case of fraud even on a worldwide basis and

even as merely ancillary relief to litigation abroad, militates very strongly

a against that argument.
(8) Thus in the Bolivinter case Donaldson MR drew attention to the
possibility and relevance of such relief, and in the Themehelp case in his
dissenting judgment Evans LJ returned to that thought in greater detail. In the
present case the Dine Group defendants, including Vivalet, are all subject to a
b Mareva injunction. Therefore, they cannot enjoy or dispose of the fruits of the
alleged fraud, even if it were the case that they have not already obtained such
fruits in the form of the discounted payments to them and to their suppliers. It
is true that a Mareva injunction is not a complete solution to all the problems
of a claimant in such circumstances: thus it does not give security or priority
over competing claims, and in a situation where, as here, the allegedly
c fraudulent beneficiary is bankrupt, that may be a serious drawback. But then
it is not clear to me that the claimant should be entitled to any priority, a point
that Evans LJ made in the Themehelp case. I accept that a claimant would not,
perhaps I should say might not, suffer from such drawbacks where he can
prevent the proceeds of a credit or guarantee ever getting into the hands of or
d being credited to the beneficiary. Nevertheless, where the balance of
convenience is being considered, it seems to me that the availability of the
protection of Mareva relief to a claimant must be a highly important
consideration and goes very far to undermine his complaint about the
difficulties of his position if the credit is drawn upon.
(9) In other words, the competing interests become the importance to
e international trade of the integrity and autonomy of banking commitments on
the one hand, and the demands of the allegedly defrauded claimant, assisted as
he is by the protection of Mareva relief, on the other hand. I say ‘allegedly
defrauded’ because, first, ex hypothesi what the claimant alleges to have been
a clear case of fraud has not been accepted as such by his bank, and secondly,
f the matter has to be dealt with at a pre-trial stage. Given that contest, it is
relevant to be reminded of what Kerr J said in the Harbottle case [1977] 2 All ER
862 at 870, [1978] QB 146 at 155–156 in a passage which was expressly identified
and adopted by Lord Denning MR in the Edward Owen case [1978] 1 All ER 976
at 983, [1978] QB 159 at 171, the essence of which for present purposes was
that:
g
‘The courts are not concerned with their difficulties to enforce such
claims; these are risks which the merchants take … The machinery and
commitments of banks are on a different level.’
h (10) There is nothing in the Norwich Pharmacal jurisdiction or in the example

of Mercantile Group (Europe) AG v Aiyela to suggest that that jurisdiction to make
orders against parties against whom no cause of action is asserted should as a
matter of principle or policy be used for the purpose of supporting an
injunction against a bank in Standard’s position. Those cases concerned
discovery against parties innocently mixed up in the wrongdoing of others. In
j the present case, however, as it seems to me, Standard stands in an entirely
different relationship to events. It is not being asked to give discovery to assist
the process of justice. It is being asked not to perform its obligation (I am
currently assuming as Mr Strauss submits that the fraud exception does not
qualify its mandate) by the very person which has previously asked it to enter
into that obligation.

(11) I do not know that it can be affirmatively stated that a court would
never, as a matter of balance of convenience, injunct a bank from making a
payment under its letter of credit or performance guarantee obligations in
circumstances where a good claim within the fraud exception was accepted by
the court at a pre-trial stage. I do not regard Kerr J and the other courts which
have approved or applied the logic of his ‘insuperable difficulty’ as necessarily
saying that it could never be done. It is perhaps wise to expect the unexpected, b
even the presently unforeseeable. All that can be said is that the circumstances
in which it should be done have not so far presented themselves, and that it
would of necessity take extraordinary facts to surmount this difficulty. This is
to be contrasted with Mr Strauss’s candid acceptance that, if his submission
were accepted, it would not be the unique or rare case which merited an
injunction against performance by the bank, but in nearly every case the c
balance of convenience would be in favour of the claimant. That illustrates to
my mind how radical his submission is, and how far it would change the law
and practice which has hitherto been recognised.
For these reasons I would reject Mr Strauss’s and Mr Philipson’s submissions
and discharge the injunction against Standard without having to go further into d
the particular arguments of this case and in particular the submissions of Mr
Males as to why Rionda can not in any event bring itself within the fraud
exception. However, I would make the following additional points, which as
it seems to me underline the validity of the Swiss banks’ case against an
injunction.
e
First, it is in any event clear that Vivalet in particular, the beneficiary under
the three letters of credit, and the Dine Group in general have already received
the benefit of the credit arrangements. This is because Vivalet has received the
benefit of the credits in its favour in part directly, by payment to it of
discounted sums which represent its profit, and in part indirectly by using the
letters of credit opened on the application of Rionda as collateral for the f
opening of further credits to finance the contracts under which the alcohol was
to come through it into the hands of the Dine Group. Those contracts have
been performed. Rionda must have known, although Mr Barg disputes it (see
below), that the credits for which it applied would be used in this way to obtain
the alcohol. Thus the maintenance of an injunction would not now prevent g
Vivalet and the Dine Group from obtaining the fruits of the fraud: they have
already done so. Indeed, this is a case where, unusually, not only the seller
beneficiary (Vivalet) but the buyer as well (USR) has already received the
benefit of the transactions in question.
Secondly, in as much as Rionda stands behind USR or the Dine Group, it too h
has received the alcohol for which the credits were opened. This is not the
usual case where the alleged fraud in question goes to the very goods in
question (or the documents) which are the subject matter of the credit. Thus
in the Sztejn case it was alleged that rubbish had been shipped in place of the
goods. In this case, however, the alcohol was shipped and received by USR (for
whom Rionda acted) and there is no claim in respect of the sale contracts j
themselves. What is said, rather, is that if Rionda had not been deceived by Mr
Cury, and if it had known the true state of affairs in the Dine Group, it would
never have lent its name and credit to these transactions in the first place. Thus
its attack on the performance of the credits is at one stage further removed than
the normal case. Indeed, Rionda pleads that it sold the alcohol under contracts

003 and 004 in mitigation of its loss. It is only in the case of contract 005 that
a Rionda has not managed to get hold of the alcohol itself, because no import
licence had been obtained. But that was a risk which Rionda took under that
contract.
Thirdly, BCGe and UEB have given full value for the documents which they
have accepted and passed to Standard and are the parties which are in effect out
b of pocket. Of course, they face the submission from Rionda (Standard takes a
neutral position) that by discounting their deferred obligations, or as in the case
of L/C 260, by entering into a back-to-back credit but on a much shorter
seven-day payment basis, they face the risk, which they have taken upon
themselves, of paying in advance of the time for payment and therefore outside
c their mandate. The fact remains that they have given full value in respect of
the credits’ deferred payment obligations, even if they were to have acted
outside their mandate. If, therefore, Standard is prevented from reimbursing
them, then the parties who will bear the effect of the court’s injunction will be
primarily BCGe and UEB, who acted in total ignorance of even any suggestion
of any fraud at the time when they gave value to Vivalet in the manner
d described.
Fourthly, even though it is not a matter that I propose to decide on this
occasion, it seems to me to be strongly arguable that BCGe and UEB did not
act outside their mandate when they discounted future obligations or entered
into other arrangements with a shorter maturity date. They were described in
e the three letters of credit as negotiating banks, and it is my provisional view
that the credits were available ‘by negotiation’ for the purposes of UCP 500, art
10. It would follow that by virtue of art 10(b)(ii), which defines ‘negotiation’
as the giving of value for documents by the bank authorised to negotiate, they
had negotiated the documents in question because they had given value for
f them. If that is so, then Standard’s obligation to reimburse them under art
10(d) took effect long before any question of fraud arose, and in my provisional
view could not be affected by any subsequent invocation of the fraud
exception, however justified the complaint of fraud might be. For much the
same reasons, I do not think that Rionda or Standard are in time to invoke
against the Swiss banks, qua confirming banks, a fraud exception which in any
g event was not known when, in reliance on Standard’s obligation to reimburse,
they negotiated the documents and entered into personal commitments on the
strength of Standard’s credits. If, on the other hand, I am wrong in those views,
and the banks were acting outside their mandate in giving value for the
documents in advance of the maturity date, then the position might be, I
h suppose, that Standard could seek to invoke the fraud exception against them:
but it has not done so.
On the contrary, the formal position before me is that Standard has served
points of defence in which it denies Rionda’s alleged implied term in support
of the fraud exception, denies the prayer for a declaration that it is not entitled
j to pay out under the three letters of credit and otherwise makes no admissions
as to the history of events which Rionda alleges against the Dine Group
defendants. Similarly, although it has, shortly before the hearing, informally
served third-party notices on BCGe and UEB, the only relief which it seeks
under those notices is the determination of the issue whether it is liable to pay
out under the credits and if so whether to BCGe and UEB respectively or to

Vivalet’s liquidator. It makes no positive alternative case against the Swiss

banks, and in particular claims no remedy against them by way of injunction. a
Fifthly, even if I assume, what is certainly not common ground before me,
that there was a ‘clear fraud’ within the meaning of the fraud exception, and
that clear knowledge of such fraud was available to Standard before the
maturity dates, at any rate so far as that need be shown at this pre-trial stage, it
remains very unclear whether Rionda would be entitled to rely on such fraud b
to rescind the 003, 004 and 005 contracts into which it has entered. After all,
the goods to be supplied under the contracts were supplied, even if in the case
of contract 005 alone there has not been permission as yet to import the alcohol
into Brazil; and Rionda has dealt with the alcohol imported under contracts 003
and 004. It was only in its points of claim that it first sought to rescind the
contracts, alternatively claimed damages in lieu. In such circumstances, even c
though it may well have good claims in fraud against the Dine Group, it is not
obvious to me that it has made out a sufficiently good case that it was entitled
to rescind the contracts so as to make it a fraud on the part of Vivalet to draw
on the letters of credit at the time when it received discounted payment under
them or used them to arrange the back-to-back facilities in favour of Socef and d
Sasol. At that time, the sale contracts still stood. That was the ground on
which Phillips J in Deutsche v Walbrook rejected the claim for an injunction, and
it seems to me to be a sufficient ground in itself for doing so.
The position therefore comes to this. Rionda claims no relief against the
Swiss banks. Standard claims no injunction against them. The Swiss banks
e
have in fact in one way or another given full value for the reimbursement that
they say they are entitled to under the letters of credit as confirming and/or
negotiating banks and did so long before any question of fraud arose. It is not
clear whether Rionda would be entitled to a rescission of the underlying
contracts. If the injunction is maintained, the effective loser by it would be the
Swiss banks. It is in any event too late to prevent Vivalet and the Dine Group f
benefiting from their fraud. These, in my judgment, are very far indeed from
being the sort of exceptional circumstances which would be needed to take this
case out of the general pattern of cases so as to make the balance of
convenience come down in Rionda’s favour, even if it did not face Kerr J’s
insuperable difficulty.
g
Rionda’s injunction must therefore be discharged.
Non-disclosure and abuse of process

I have referred above to Mr Males’ submissions to the effect that Rionda
failed to make full and proper disclosure in seeking its ex parte injunction; and h
that by reason of the absence of a real issue between Rionda and Standard these
proceedings are an abuse of process.
I suspect that the ‘real issue’ point substantially overlaps with that aspect of
the non-disclosure complaints where Mr Males submits that the court had not
been presented with a full and candid account of co-operation between Rionda
and Standard in bringing this action. There is, however, an extra dimension to j
the argument in so far as it is necessary to show that a real issue exists between
a claimant and a defendant who has been served in order to found jurisdiction
against other defendants who have yet to be served outside the jurisdiction on
the basis of Ord 11, r 1(1)(c). In this case the other defendants against whom
service has been permitted under r 1(1)(c) as necessary or proper parties are the

Dine Group defendants, and I am not sure that UEB has any standing to
a complain about that. The oddity is, of course, that UEB and BCGe have been
seriously affected, one might say impleaded, by the injunction against Standard
without even any attempt on the part of Rionda to make them parties. Thus
Mr Males’ real complaint, as I see it, other than that of non-disclosure, is that
Rionda has sought, without making the Swiss banks parties to the action, to
b prevent payment to them by a collusive action against Standard in
circumstances where, as foreign companies, jurisdiction against them in this
forum is uncertain and, as they would say, seriously disputed. That
jurisdictional argument has not, however, been opened before me on this
occasion.
In my judgment it would be an abuse of process to seek to obtain effective
c relief against foreign persons outside the jurisdiction by a collusive action
against a defendant who can be served within the jurisdiction, if in truth there
was no real issue between the colluding parties.
The question therefore is whether Rionda and Standard are, or rather were,
at the time the injunction was sought before Tuckey J, to be viewed as
d colluding parties between whom no real issue arose. This is not, I think,
something on which I could come to a definitive view on the material before
me and in the absence of hearing evidence: and if this issue were to be
examined, it may be that the rules of privilege would make the process a
difficult one. What I think I can say is that I have such doubts as to the matter
e as to be entitled to regard this as a further factor which can legitimately inform
my discretion for the purpose of deciding whether maintenance of an
injunction against Standard is just and convenient. In an affidavit made on
behalf of Standard by a senior manager, in part for the purpose of meeting this
point, nothing was said which adequately allayed the concerns I have about it.
In my view the independence of Rionda and Standard in the proceedings to
f date is seriously in question. Of course, by holding that no injunction should
be maintained against Standard I suspect that I create a situation where a real
gulf may well open up between those parties, since Standard may then feel
obliged to pay the Swiss banks, which Rionda plainly would not want, and
Rionda may then press its claim against Standard to the effect that Standard has
g acted outside its mandate and in breach of its obligations to Rionda. No doubt
it is in part Standard’s fear of being embroiled in such litigation that has
informed its present tactics. None of that, however, is to say that in the
bringing of this action and in the argument to date there has been any real issue
between them. In my judgment, while Standard has not been willing formally
h to consent to any acknowledgement of a situation where the fraud exception
applies, it has, as I am inclined to infer, indicated to Rionda that it would not
oppose Rionda’s seeking of an injunction against it—as it has not. On the
contrary, while saying that it is for present purposes neutral on all substantive
issues raised before me, it has argued strongly in favour of maintaining the
injunction against it on the balance of convenience, provided I am sufficiently
j persuaded of a good arguable case (which it does not itself advance) that
Rionda brings itself within the fraud exception. Given also the background to
these proceedings, and the leading role that Standard among other banks has
played in supporting Rionda through its troubles, and, as I have learned from
the evidence before me, given also the extent to which Standard is unsecured
in its transactions with Rionda, I would infer for the purposes of this pre-trial

hearing that Standard wanted to have an injunction granted against it, to

prevent it paying under its letters of credit. That is consistent with the letter a
written by its solicitors immediately prior to Rionda’s launching of these
proceedings and is certainly the position it has demonstrated to me, and I think
I am entitled to view it as likely to have been the position that it indicated to
Rionda before the action began.
It follows also that in my view the true nature of the co-operation or at any b
rate the common ground between Rionda and Standard has not been disclosed
in circumstances where it ought to have been. In effect, Standard has
continued to support Rionda, whether under the standstill agreement or not,
both generally and in relation to its strategy of litigation, both in this country
and abroad. Indeed, in his New York deposition, Mr Barg accepted that the
banks, including Standard, receive reports on the progress of the litigation c
from time to time. As Mr Strauss submitted, none of this is surprising or in the
least reprehensible. What is, however, well arguable is that it is an abuse of
process to seek indirectly to implicate other foreign parties in litigation which,
at any rate at the ex parte stage, Standard had no interest in opposing, and to
do so without making a clean breast of the mutual and supporting role being d
given by Standard, as defendant, to the claimant Rionda.
Quite as significant, however, in my judgment has been the non-disclosure
in connection with Rionda’s financial position. I have set out the facts of this
above. In my view Rionda’s financial situation was misrepresented to
Tuckey J. Given the serious implications and unusual nature of the injunction e
sought, and the importance of the undertaking in damages in such
circumstances, I regard the failure of Rionda to make a full and candid
statement of its financial situation as a matter for concern, and as rendering the
injunction obtained against Standard as one that ought to be discharged on that
ground alone. The irony is that, now that the true position has emerged, the
uncertainty of Rionda’s financial situation has itself been relied on as a factor f
in its favour on the balance of convenience. In my judgment, however, the
court would be doing a disservice to the international trading and financial
community if it were not to uphold in such a case the rigour with which it
demands proper candour at the ex parte stage. Although Standard, against
whom the injunction is on the face of things sought, does not complain about g
this non-disclosure and probably could not complain about it, since it is privy
to Rionda’s financial affairs, the absence of complaint merely serves to
illustrate my serious concerns that Standard and Rionda are playing on the
same side. The effect of the injunction, however, and in my view the intended
effect of it, was not merely to place a formal embargo on Standard’s payment,
but to prevent the non-parties UEB and BCGe from claiming reimbursement h
under the three credits concerned. Therefore in my judgment the Swiss banks
are entitled to complain.
These, therefore, are additional reasons why discharge of the injunction
appears to me to be called for.
In these circumstances it may not matter too much whether the other items j
of non-disclosure relied on by Mr Males are equally effective. I will therefore
briefly state that I am not satisfied that Rionda had made full and proper
disclosure of UEB’s (and therefore also BCGe’s) position. The impression
given by Rionda’s affidavits was that Vivalet was yet to reap the benefit of its
fraud, and that UEB had merely taken its own risk in extending ‘back-to-back

finance’ to Vivalet (para 13 of Mr Spencer’s affidavit). UEB was referred to as

a an advising, rather than as a confirming and (at least arguably) negotiating
bank which would be reimbursing itself with the proceeds of Standard’s
credits. The significance of para 13 of Mr Spencer’s affidavit was therefore
seriously undermined. Mr Barg has sworn an affidavit stating that Rionda was
unaware of UEB’s own ‘back-to-back’ letters of credit, while accepting that
b Rionda was ‘aware that a company named Tradinter … was playing a role of
some kind in arranging the financing for the purpose of the alcohol from the
original suppliers’. In my judgment, as I have mentioned above, Rionda was
or ought to have been aware that the whole purpose of Standard’s letters of
credit was to set up a mechanism whereby credit was generated for the
purchase of the alcohol from its original suppliers, Sasol and Socef, and indeed
c credit not only for the cost of those purchases but also for the large increase on
top of that cost to be taken off-shore in Vivalet’s hands. Rionda must have
contemplated that Vivalet’s profit on the transactions would most probably be
discounted so as to increase the Dine Group’s cash flow. While the details of
UEB’s involvement may indeed only have emerged with this litigation, I
d consider it likely that Rionda’s evidence before Tuckey J materially
understated its understanding of the financing and its purposes as a whole. I
am therefore sympathetic to Mr Males’ submission in this regard, but do not
think I need to found my decision upon it.
I would not have discharged the injunction on the basis of non-disclosure of
Mr Llorente’s consulting fees.
e
Mr Males’ submissions on the merits of UEB’s entitlement to reimbursement
Mr Males has invited me to go on to conduct an immediate trial of the issues
which arise between UEB and Standard under L/Cs 221 and 260, but Mr
Brindle on behalf of BCGe has made it clear that it does not join in that request,
but merely desires the right to sue Standard, if Standard does not pay. Neither
f Rionda nor Standard consent to a final determination of the issues raised by Mr
Males. In the circumstances, I do not think I should or need to say anything
further about them. To the extent that it was appropriate to take them into
account for the purpose of my pre-trial decision to discharge the injunction
against Standard, I have done so.
g I will therefore merely record that Mr Males presented attractive arguments
to the effect that the fraud exception properly so-called was to be narrowly
confined to a situation where payment is sought by or on behalf of the
beneficiary as distinct from a bank asserting an independent right to payment,
as he submitted UEB was here doing as a confirming and/or negotiating bank;
h that in any event the fraud must directly impeach the beneficiary’s right to
payment under the credit, e g as where the beneficiary presents documents
which he knows to be fraudulent, so that a merely collateral fraud was
insufficient; and that in any event the bank in question had to have clear notice
of the fraud by the time of presentation of documents.
There was also Mr Males’ submission based on Vivalet’s assignments, but
j again I do not propose to say anything about that.
Conclusion
In conclusion, the injunction against Standard restraining it from giving
instructions for payment out under the three letters of credit will be
discharged. That still leaves in effect the Mareva order against the Dine Group

defendants, including as it happens the injunction restraining them from

seeking payment out under the credits. Since the Dine Group defendants have a
not sought the discharge of that injunction, it stands, however anomalously, as
it did for the same reason in the Bolivinter case (see [1984] 1 Lloyd’s Rep 251 at
256–257). As Donaldson MR there made clear, however, that does not inhibit
Standard from acting on the credits as it is minded to do, subject, however, to
the Mareva relief against disposal by the Dine Group defendants. b
Order accordingly.
Rania Constantinides Barrister.

Czarnikow-Rionda Sugar Trading Inc V Standard Bank London LTD and Others (1999) 1 All ER (Comm) 890

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All England Law Reports 9 June 1999

890 All England Law Reports [1999] 1 All ER (Comm)

Czarnikow-Rionda Sugar Trading Inc v a

QUEEN’S BENCH DIVISION (COMMERCIAL COURT)

Bank – Documentary credit – Irrevocable credit – Injunction restraining payment by

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QBD Czarnikow-Rionda v Standard Bank 891

Thus on an inter partes application for such an injunction, the balance of

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892 All England Law Reports [1999] 1 All ER (Comm)

South Carolina Insurance Co v Assurantie Maatschappij ‘de Zeven Provincien’ NV,

RIX J. In these proceedings the plaintiff, Czarnikow-Rionda Sugar Trading Inc

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QBD Czarnikow-Rionda v Standard Bank (Rix J) 893

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894 All England Law Reports [1999] 1 All ER (Comm)

‘However, let it be assumed in the plaintiffs’ favour that these

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QBD Czarnikow-Rionda v Standard Bank (Rix J) 895

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896 All England Law Reports [1999] 1 All ER (Comm)

The underlying transactions

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QBD Czarnikow-Rionda v Standard Bank (Rix J) 897

In effect therefore Rionda was acting as USR’s guarantor of the repayment of

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898 All England Law Reports [1999] 1 All ER (Comm)

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QBD Czarnikow-Rionda v Standard Bank (Rix J) 899

The letters of credit

j ‘Upon receipt at our counters in Geneva of documents issued in strict

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900 All England Law Reports [1999] 1 All ER (Comm)

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QBD Czarnikow-Rionda v Standard Bank (Rix J) 901

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902 All England Law Reports [1999] 1 All ER (Comm)

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QBD Czarnikow-Rionda v Standard Bank (Rix J) 903

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904 All England Law Reports [1999] 1 All ER (Comm)

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QBD Czarnikow-Rionda v Standard Bank (Rix J) 905

the nominated or confirming bank may have committed itself to payment,

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906 All England Law Reports [1999] 1 All ER (Comm)

constitute a breach of contractual duty owed to the Plaintiff by the Bank.

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QBD Czarnikow-Rionda v Standard Bank (Rix J) 907

another’s wrongdoing, a fortiori there must be jurisdiction to prevent him

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908 All England Law Reports [1999] 1 All ER (Comm)

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QBD Czarnikow-Rionda v Standard Bank (Rix J) 909

passage, which emphasised the ‘wholly exceptional’ nature of any such

In the result, the plaintiff failed to obtain an injunction on two separate

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